Panel revisiting approvals for malls, hears testimony

November 2, 2012

KAHULUI - A meeting room at the Courtyard by Marriott hotel in Kahului was transformed into a courtroom Thursday as the state Land Use Commission heard opening arguments in a case that will determine whether two planned retail centers and 250 affordable housing units can proceed on lands mauka of Piilani Highway in Kihei.

The commission is revisiting approvals for an 88-acre lot that is subject to 20 conditions the body imposed in 1995 when granting a land reclassification from agricultural to urban.

At least 75 people filled the standing-room-only meeting room.

Article Photos

Seated at the table are Tom Pierce (from left), attorney for the interveners; Mark Hyde of South Maui Citizens for Responsible Growth; Rodney Funakoshi and Jesse Souki with the state Office of Planning; Michael Hopper and Jane Lovell, deputy corporation counsel for Maui County; Maui County Planning Director Will Spence; and Joel Kam, attorney for Honua‘ula Partners.The Maui News / NANEA KALANI photo

At issue is whether any of those land-use conditions have been violated since the property changed hands and plans have shifted from a proposed 123-lot light industrial subdivision under former landowner Kaonoulu Ranch to two large shopping centers totaling 700,000 square feet of retail space under California-based Eclipse Development Group.

Also proposed on the site is an affordable housing project Honua'ula Partners wants to build there tied to its master-planned luxury golf community of the same name above Wailea.

A challenge from community groups South Maui Citizens for Responsible Growth and Maui Tomorrow Foundation and Kihei resident Daniel Kanahele prompted the commission to revisit the site's approvals.

They contend that the developments now being proposed are substantially different from what Kaonoulu Ranch represented to the Land Use Commission. Neither developers of the planned retail centers nor the affordable housing project have formally petitioned the commission to proceed with their projects.

The commission has initiated a so-called "order to show cause" hearing, signaling that a violation or violations may have occurred. The landowners will need to "show cause" as to why the property should not revert to its former land-use classification or be changed to a more appropriate classification.

South Maui Citizens for Responsible Growth, Maui Tomorrow and Kanahele were collectively granted intervener status in the case, which allows the parties to participate in the proceedings before the commission.

Attorneys representing five parties in the case made their opening remarks Thursday. They represent: landowner of the retail developments Piilani Promenade North and South (which are both controlled by Eclipse); landowner Honua'ula Partners; the state Office of Planning; Maui County Department of Planning; and the three parties intervening in the case.

Attorney Jonathan Steiner, representing Piilani Promenade, argued that the landowner has not violated any of the land-use conditions imposed in 1995.

That includes, he said, a condition that stipulates that the property "shall be developed in substantial compliance with the representations made to the commission."

Steiner said he will share evidence and witness testimony to prove that commercial and retail uses were presented as a possibility for the former light industrial subdivision.

He added that the projects will result in hundreds of construction jobs, investment in much-needed public infrastructure, and the first leg of the long-planned highway to connect Upcountry and South Maui.

Attorney Joel Kam, representing Honua'ula Partners, also argued that his client has not violated any conditions placed on the property.

"Honua'ula's not in violation of the order because it hasn't done anything," Kam told commissioners. "At this point, there's only a desire to use the property for the affordable housing use. . . . The commission cannot find a violation based on a mere desire to do something."

Kam said that his case will show that plans for the site have always included the possibility of apartment units, and added that the 1995 order does not prohibit such use.

He said that the Hawaii Supreme Court has held that the Land Use Commission cannot hold landowners to any conditions not expressly stated in an order.

"The conditions that are enforceable must be reasonably ascertainable," Kam said.

"The county intends to show that based on a review of the project's history . . . the developer represented, and the commission understood, that the uses in the county's M-1 Light Industrial zoning district would be permitted for this project," Hopper said. "Both commercial and apartment uses are allowed in this district."

Jesse Souki, director of the state Office of Planning, took issue with the county's argument, saying that the matter before the commission is "not whether the proposed project today is consistent with county zoning and other county entitlements."

"It is about whether the proposed project is substantially compliant with the Findings of Fact, Conclusions of Law, and Decision and Order issued over 17 years ago on February 10, 1995," Souki said.

"The state will show that if the petitioners are to proceed with their proposed Piilani Promenade and housing developments, as indicated for the first time in approvals drawn from the county, they would not be acting in accordance with the representations they made to the LUC in 1994 and '95," he said.

Souki added: "Consequently, the question for the commission is not whether a shopping mall is a good idea for the region or whether affordable housing is needed in the region. . . . The crux of the matter is that the commission, the parties and the community were never presented with the project that the petitioners are proposing today. We shouldn't be trying to avoid the process."

Tom Pierce, attorney for the interveners, said the differences are "profound" between what was presented in 1995 and what is being proposed today.

"What this case is about is an attempt by developers to push a project through that will have significant impact for South Maui for decades to come without there having been an opportunity for county or state review . . . and certainly no opportunity for this Land Use Commission to review it," Pierce said.

Steiner called his first witness in the case, Wailuku attorney B. Martin Luna, who represented former landowner Kaonoulu Ranch in obtaining the 1995 land reclassification.

Luna stressed that the light industrial subdivision was "conceptual" at the time.

Steiner had the witness revisit a market feasibility study completed by the ranch that includes references to a mix of uses for the property.

The 1994 market study pointed out that the light industrial district allows for more than 30 uses, including a variety of warehousing and manufacturing activities, wholesale business and apartment houses.

The zoning also allows for dozens of additional uses under the neighborhood business, community business and central business district zones. Those designations allow for everything from churches and drugstores to gas stations, banks, restaurants and retail stores.

A representative for the ranch appears to have indicated to the Land Use Commission in 1994 that commercial and retail uses would be secondary to primary light industrial uses, according to transcripts from that meeting that were presented in the case.

Earlier in the proceedings, Land Use Commission Chairman Kyle Chock denied a request by the county to consider excluding public testimony at the meeting.

Approximately 20 people testified, with most of the comments focused on support or opposition of the proposed shopping centers project.

Island residents, the Hawaii Regional Council of Carpenters and the Maui Chamber of Commerce spoke in favor of the centers, while the Kihei Community Association and some South Maui residents shared concerns in opposition.

The commission will resume its meeting at 9 a.m. today at the Courtyard by Marriott Maui Airport hotel in Kahului.